What you should know about a second VA loan is provided below
You probably already know that you are eligible for certain benefits if you have served in the U.S. military.
The VA loan, which requires no down payment and is one of the most popular, is another. What’s the finest thing about it all? It is reusable multiple times.
Let’s examine how and when to use your VA loan as well as the number of times you are permitted to do so.
As long as they meet certain requirements, qualified veterans and active duty service members are eligible to apply for a VA loan as often as they like.
It is possible to have multiple VA loans open at once, albeit the second loans have distinct restrictions.
Your initial VA loan’s borrowing capacity is unrestricted. Depending on where you live, the second VA loan will have a cap.
Those Eligible for VA Loans:
You must fulfill a number of strict requirements before you can apply for a VA loan. These vary based on how long you served and whether you were in the National Guard, reserves, or active service.
In general, if you started serving after August 2, 1990, and you were on active duty, you must meet one of the following criteria in order to be eligible for a VA loan:
- A minimum of 24 months of continuous service.
- At least 90 days after you were called or given an order to report for duty.
- If you were discharged due to a service-connected disability, less than 90 days
- If you were let go due to a hardship, the government’s convenience, or a force reduction, you must serve at least 90 days.
- You also must have gotten a dishonorable, other-than-honorable, or bad-conduct discharge if you want to be eligible for a VA loan.
How Often Can a VA Loan Be Used?
Which is good news. Veterans and active-duty military personnel can make use of VA loans as often as they like, which is good news.
Each service member is given a certain amount of “entitlement,” so this does not imply that you can retain an infinite number of loans. Your basic entitlement is $36,000. Therefore, if your home loan balance is under $144,000, the VA will ensure that your lender will receive $36,000 in the event of a default.
The VA will cover up to 25% of loans that are larger than this sum. It’s crucial to remember that there are no restrictions on how much you can borrow. The VA won’t place a cap on the size of your loan if you have full entitlement.
You are still eligible to use your VA loan even if you have already done so. To get your full right back, you must have paid off all of your debt and given up ownership of the property.
If you had fully repaid the VA before your home was repossessed, you would still be eligible for your full entitlement.
How to Obtain Another VA Loan
In some circumstances, you can still obtain a VA loan if you already have one. For a second loan, you only need to have the “remaining entitlement”; you don’t need to have all of your entitlement.
There are many circumstances in which you might require a second VA loan. When a military member receives orders to a new station, this is one typical scenario.
They intend to buy another home at their new duty station but, for some reason, decide not to sell their current house, which is backed by a VA loan.
Other scenarios include having
- The asset repaid the loan while retaining ownership of the asset.
- Having a foreclosure and failing to repay the debt
- Home refinance using a non-VA loan
The amount you can borrow when using your remaining entitlement is governed by county loan limits. These restrictions, which correspond to those established by the Federal Housing Finance Agency (FHFA), will change depending on the cost of living in each location.
The VA will pay up to 25% of the loan maximum, less any entitlements that have already been spent, or 25% of the county limit, whichever is less. 3
This means that if you live in a low-cost living area and want to buy a costly home, you might have to make your down payment upfront to satisfy your lender’s need for a 25% guarantee.
How to Determine Your Balance
Consider the following scenario: You have previously spent $50,000 of your entitlement and are seeking a $250,000 loan in a county with a $500,000 FHFA loan maximum. You will only be entitled to the lesser of the following:
$50,000 minus $125,000 multiplied by 25% equals $75,000
25% of $250,000 equals $62,500.
- Your remaining eligibility for a second mortgage in this scenario is $62,500 because the second number is less.
- Only residences that cost more than $144,000 are included in this computation of remaining entitlement.
A VA Loan’s Use and When
In a number of circumstances, including the following, a VA loan can be a great choice:
- I refuse to pay a down deposit.
- want to put down money but don’t want to pay the typical 20 percent rate.
- wish to stay away from the private mortgage insurance (PMI) that VA loans do not demand.
Once all VA loans have been repaid in full, is there a cap on the number of times you can use them?
No, you are not limited in how often you can utilize your entitlement. To “restore” your right to the full value of the property and use it again, you must have fully repaid your prior loan(s) and no longer own it. You can then use it once again.
Is it possible to obtain a VA loan more than once?
Although there are requirements, you can obtain a VA loan more than once. You must have fully repaid your prior VA loan and no longer be the owner of the property in order to be eligible for an additional full entitlement loan.
You still have to be eligible for a partial entitlement, and the loan can’t be more than what the FHFA allows for loans in your county.
Can I get another VA loan?
You can indeed have many VA loans open at once. However, how much you can borrow from a second loan will depend on where you live and how much of your entitlement from your first VA loan is still unutilized.